commerce essay

Leadership Management And Leaders In A Business Commerce Essay

Published: 23, March 2015

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Sharp and Howard (1996, as cited in Saunders et al, 2003) explain two major reasons for reviewing literature published by accredited scholars and researchers. The preliminary search enables the researcher to generate and refine ideas. This is followed by a critical review, a crucial element of any research project. The purpose of the theoretical underpinning is to convey to the reader what knowledge and ideas have been established regarding the subject matter. Saunders et al. (2003) state that a review of the literature is necessary to help develop a thorough understanding of, and insight into previous research of one's research question (s) and objectives. The following literature review will aim to differentiate between the process of leadership and the position of a leader. Knowledge and ideas of the two will be presented with the strengths and weaknesses highlighted. The importance of explaining this variance cannot be underestimated; confusion between the two exists and is often debated. This review will show leadership to be collaborative; involving cooperation, teamwork, networking and the mobilising of resources; whereas a leader is presented as individualistic, special, with successful figure's further examined.

Understanding the requirements of leadership and the development of positive leadership skills is arguably the single most important task for society (Krause, 1997); this view is particularly true in the management of an organisation.

"Leadership in contemporary organisational life has become a pervasive phenomenon."(Storey, 2004: 3.)

Storey (2004) believes there are few, if any, hotter topics in management, business and organisation theory at the present time, than leadership. Professor Gareth Jones (ed. The RSA, 1999) asked why, as the 20th century came to a close, are we so obsessed with leadership? Jones believes it is historically fundamental to be so and cites Karl Marx and Charles Darwin as intellectual giants of such a philosophy. It is widely regarded (Bennis, 1989; Conger and Kanungo, 1998; Hodgkinson, 1983; Wright, 1996) that leadership advice is generally, anecdotal and situational, based on an individual's own experiences and beliefs. Leadership has always been recognised as a complex enterprise (Burns, 1978; Hodgkinson, 1983; Knowles and Saxberg, 1971), and as recent studies assert (Kouzes and Posner, 2002; Mole, ed. Storey, 2004), vision and collaboration are now more important characteristics of effective leadership. Management is an organised body of knowledge (Drucker, 1985) and is about seeking order and stability, however, leadership is about searching adaptive and constructive change (Northouse, 2004).

Max Weber was deeply intrigued about the leader's charisma and how the affects it has on those around (Conger and Kanungo, 1998), the researcher shares this interest through reading around the array of published literature on the subject. Charismatic leadership obviously represents a percentage of the ever-increasing amount of secondary data available; however, compared to other approaches, this percentage is low. The researcher has a keen interest in the differing styles of leadership used in today's society. Being given the opportunity to establish, which type of style achieves success, in a particular industry, is of great importance to the researcher; is a justification for research, and a personal motivation towards the study.

"Remember the difference between a boss and a leader: a boss says 'Go!', a leader says, 'Let's go!'"(Hughes et al., 1999:128)

1.1 Research Question

Can leadership offer competitive advantage to corporations on regional basis irrespective of national culture? What are the core characteristics possessed by founders or great leaders those have helped regional subsidiaries in conservative states to achieve sustainability till date?

Our main focus is to provide and analyse characteristics those can offer competitive advantage to today's competing organisations worldwide. On the other hand, we are also interested to witness and analyse leadership characteristics or styles or visions those have helped particular organisations enhance long-term sustainability. This is because both these questions and the propositions revolving are complimentary to each other (i.e. leaders with particular characteristics will be incepted in corporate culture offering that particular organisation competitive edge against closest peers) and can enhance the reliability and validity of our analysis and findings. These findings will be translated to witness whether great leaders such as Sam Walton, Michael Dell's unique leadership characteristics still prevail on regional basis or just confined to corporate headquarters.

In other words, if a multinational corporation has unique leadership skill driven corporate culture will its subsidiary in conservative business environment such as Middle East share the same or differ? If it does then leadership offers competitive advantage irrespective of cultural and regional bias.

1.2 Background

Leadership should be viewed as achieving goals through people; furthermore, all managers are leaders so should act accordingly (Armstrong, 1990). However, if managers are to achieve optimum results then there is a need for them to understand the nature of leadership before establishing a suitable style. Leadership must be grounded in principles, which are properties of the universe (Covey, 1992). According to Covey (1992), there exist four levels of principle centred leadership with key principles:

Organisational - Alignment.

Managerial - Empowerment.

Interpersonal - Trust.

Personal - Trustworthiness.

Mahatma Gandhi (below) once said seven things would destroy us, Covey (1992) attempted to relate this statement within the leadership framework. Many lessons were drawn from Gandhi's life, and could be used to develop a leadership framework to bring the moral and spiritual dimension to leadership and guide employees to a higher standard (Nair, 1994). Simple methods such as personal observation and a commitment to the truth allow a leader to see things as they really are, understanding the true needs of the followers they are leading (Nair, 1994). Leaders need to develop their own values, by reading scriptures, the New Testament, words by Gandhi, etc. (Giuliani, 2002).

"If the leader fails to uphold values of his society, or the values to which his society aspires, he is unworthy of that uncommon honour which the leader represents."(Atherton, 2003: 114).

The development of leadership has long been on the agenda globally; Alimo-Metcalfe, Beverly and Lawler (2001) reported the findings of a study of public and private sector organisations. Employees were constantly fending off lies and felt their opinions and feelings were not being sought. A key recommendation from the findings was the development of in-house leadership skills. Leadership is like athleticism, that is one has to stay in shape. By handling crises as they occur, they may one day be conditioned to handle the worst kind of test (Giuliani, 2002).Giuliani (2002) discusses leadership principles that have proved successful to him in a distinguished career; he is convinced that leadership is not exercised in a vacuum, independent of their individual past. This, of course, is quite the contrary of much leadership literature; certainly affirming words. Giuliani (2002) believes a leader's approach must be formed from the raw material of his or her own life, because leadership does not simply happen, however, can be taught, learned and developed. Much of Giulani's (2002) theories on leader's and leadership include articulate advice on the many issues involved. However, not all of the principles should be adhered; Giulani advocates keeping expectations low at all times so that the leader looks good when results turned out better than expected, under promise and over deliver is how he put it. The notion flip-flopping is rarely recommended throughout much of the literature, this means changing your mind as a leader. It is not a sign of weakness; moreover, it is an indication of intellectual honesty (Giuliani, 2002). Giuliani (2002) seldom highlights the current concepts of leadership, however does offer much quality in regards to some key aspects of the subject, with certain characteristics being given individual chapters. Preparation is a major rule in leadership, and stays with us our entire lives; without it, there can be no leadership. A career of relentless preparation means leader's can borrow from their other contingency plans (Giuliani, 2002).

"When selected for a position of leadership, do not believe you were selected by God,"(Giulani, 2002: 100). It is apparent how James Stokesbury's words are so accurate when he expressed how leadership always remains the most baffling of arts, and one of the highest and most elusive of qualities; it will remain an art (Stokesbury, ed. Waddell, 1994).

2.0 Literature Review

2.1 Leadership offering competitive advantage

Despite their best efforts, a significant number of firms are still a long way from having the leadership capacity they need to excel today (Kotter, 2001). Though many may be moving in the right direction, progress seems to be coming very slowly (Yukl, 2002). In some cases, firms are clearly making no progress at all (Bennis & Robert, 2002). Just as vision helps leaders to produce change that eludes managers and bureaucrats, powerful ideas can transform situations that are impervious to programs, tools, or simplistic advice (Mintzberg, 1994). New ideas are what we need - or, more precisely, new ways of thinking about some very basic issues. It would help greatly if we could take the concept of the professional manager who can manage anything and drive a stake through its ever so resilient heart (Bennis & Robert, 2002). That concept is still very influential today, despite some people's efforts to demonstrate the problems with it. It haunts MBA education (Yukl, 2002). It influences how managers think about their careers (sometimes in most destructive ways). It is used to justify tragic staffing decisions, some of the more outrageous acquisitions by raiders, and many of the least successful diversification efforts seen in the last two decades (Kotter, 2009). Unlike management, the requirements for leadership include some things that are very situation-specific and that tend to take time, often much time, to develop (Storey, 2004). This is why no one has ever dreamed of suggesting the concept of the "professional leader (Mintzberg, 1994)." Of course, all this does not preclude the existence of a few unusually broad and talented people who can move easily across industries and companies (Bennis & Robert, 2002). There will always be some people like that. But they will always be rare (Mintzberg, 1994). And even those people will have limits to what they can manage (Kotter, 2001).

For the foreseeable future at least, most managerial jobs will have a leadership component to them. Big jobs will usually require a lot of leadership (Bennis & Robert, 2002). It is time we explicitly recognize that in the way we think about those jobs (Storey, 2004). When we do, it will have a powerful impact on how we staff managerial jobs and on how we go about developing people for those jobs (Mintzberg, 1994). It will also shape (for the better) how we think about business strategies, especially regarding acquisitions (Yukl, 2002). Mention the word "leadership," and the vast majority of folks will think of Gandhi or Churchill or Iacocca. In doing so, they raise the concept to a level where it seems relevant to a handful of people at most (Kotter, 2001). Thinking that way, the young manager doesn't try to develop her own leadership potential, because, after all, she realizes that she is just a mortal and was surely not born a leader (Mintzberg, 1994). Thinking that same way, her boss does nothing to develop that potential either (after all, the boss rationalizes, the kid is not a young Iacocca). The same boss also does not worry about leadership when recruiting (finding the next Leader, he points out, is surely the CEO's job). The overall effect of all those actions is obviously enormous (Storey, 2004). Leadership, with a small "1," is of incredible importance in today's world. (Mintzberg, 1994) Its cumulative effect often makes the difference between dreadfully stifling and unresponsive bureaucracies and lively, adaptive organizations (Kotter, 2001). At the level of a single individual, it sometimes occurs in such a subtle way that we don't even notice it (Storey, 2004). That is especially true if the vision is "borrowed" (developed not by the individual but by someone else) and the number of people who must be led is very small, as is so often the case (Yukl, 2002).

A firm that has taken the time to develop practices and programs that build strong management teams able to provide a business with effective leadership has a most powerful source of competitive advantage today (Kotter, 2001). And even if a firm is competing against a very rich and very large corporation, if that competitor does not have comparable practices, my research suggests that it may well require a decade to develop the conditions that can sustain those practices (Yukl, 2002). And during the 10-year period, the firm with strong leadership has a chance, in a truly competitive environment, to pulverize the competition (Storey, 2004). The problem today is that many people consider these issues either esoteric (e.g., leadership is about Gandhi and Churchill) or "personnel" trivialities (e.g., recruiting), or possibly both. That is, they fail to see that the business environment today has, in a sense, democratized leadership, making it relevant not for the few but for the many (Bennis & Robert, 2002). They also fail to recognize (or refuse to acknowledge) that whether the many are prepared for the leadership challenge is directly a function of core organizational practices, not peripheral "personnel programs (Storey, 2004)." And in the broadest sense, they fail to realize that what we are discussing here is how a changing business environment is shifting the bases of competitive advantage, and thus of what will be required to excel in the future (Yukl, 2002).

3.0 Secondary Research-Empirical Evidence

3.0 Corporate Leaders

In this section we will sketch the philosophies & approaches, which were followed by four great corporate leaders. This will help us to differentiate in built leadership skills and those that can be acquired through training and coaching or team work. The literature review provides characteristics of past leaders who characteristics could be viable in 21st century but can have some pitfall with the fast moving 21st century corporate world (Krames, 2003). To remove this bias we would look in short in life's of some corporate leaders. They are John. D. Rockfeller Sr, Sam Walton, Jack Welch & Michael Dell. There are many Great corporate Leaders other than these four e.g. Andy Groove, Bill Gates, Herb Kelleher, Percy Barnevik etc. The reason to choose these is just Random Sampling but has chosen Rockfeller to see whether leader characteristics changed/remained same with time. Most of the biographies about the leaders is taken from the book "What the Best CEO's Know" (2003) written by James Krames

3.1 John.D.Rockfeller Sr

He was born in the year 1839 and raised in the strictest Baptist faith (Krames, 2003). He was greedy from his childhood as he used to buy candies from the shops & sold them to his siblings at a profit. After finishing his basic schooling entered a job as an accountant at the age of 16 (Krames, 2003). Along with an Associate & a Chemist founded the first refinery in Cleveland in 1863 and named it as Standard Oil. Standard Oil grew at a rapid rate as Rockfeller reinvested his profits & kept the cost & wages as low as possible (Krames, 2003). He never liked to be in public and the only place people found him was in his office. He was never seen in the Oil regions (Bass, 1985). Rockfeller's vision was that he knew by controlling refining he was going to be the King in the oil segment but at the same time he started Vertical integration i.e. controlling the chain from extraction- Refining (Krames, 2003). Rockfeller's strict Baptist faith made him despise personal luxury & drove him to reinvest all his profits (In 1886 Net profit = $15 Million/year). When a new distillation Method came in 1875 he quickly decided to do refining in only three of his outlets to improve Economies of Scale (Krames, 2003). He always had one more philosophy which he followed and took Standard Oil to success was that "When in a sector not much happens you can achieve success by grabbing the Distribution Channel" (Bass, 1985).

3.2. Sam Walton

There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else---Sam Walton.

Most everything I've done copied from someone else---Sam Walton.

Sam Walton regarded as one of the greatest Entrepreneurs of the 20th Century who founded Wal-Mart the world's largest company (Wal-Mart topped the list of Fortune500 companies in 2002 (Krames, 2003). Sam born in Oklahoma to Thomas Walton a farmer cum banker who taught Sam that Success= Work+ Work + Work (Bathory, 1978). Sam's taste in retailing grew when he seldom visited his family owned small store during the holidays. After graduating from college he started as a Management Trainee at J.C. Penney Management for $75/month (Krames, 2003). He always wanted to open his own business so took franchise of Ben Franklin who was number two to Sterling stores (Bathory, 1978). He used to spend much more time in Sterling store studying their displays, comparing prices & annoying its owner. In 1962 first Wal-Mart store was opened & based its model on Discounting+ location of store in rural areas (Bathory, 2978). When it came to learning there were no limits to Walton (Krames, 2003). He studied competitor's prices, merchandising techniques to improve his own store. His one of the philosophies was "To improve something everyday" (Krames, 2003). He created a "culture of partnership" in Wal-Mart, which is give employees share of profits; Voice and then they will work hard. He said "Learn from competitors but remain faithful to your company vision which was discounting (Bathory, 1978).

3.3 Jack Welch

I never associate the word passion with manager, and I have never seen a leader without it.--- Jack Welch

You have got to have incredible energy to lead any organisation. You have got to be on fire, if you will. --- Jack Welch.

John Frances Welch was born in Salem Massachusetts in 1935 (Krames, 2003). He completed his M.S & PhD from the University of Illinois in Chemical Engineering. Jack Welch mentor was his mother who taught him the mixture of unconditional love and to set very tough standards for achievement which brought best in him as well as in others (Welch, 2001). His greatest break was to grow up in an atmosphere in which there were a lot of team sports (Krames, 2003). He learnt from that winning is about having the very best people . When Jack Welch joined GE its revenues were $25 billion and when he stepped out it showed $130 billion. He created a "Learning culture" in GE. His approach to create an Authentic-learning organisation was as follows (Welch, 2001):

Import best ideas into your organisation.

Reward those who bring the best ideas & celebrate the new ideas i.e. put it in GE magazine.

During his tenure of 20 years in GE spend almost 1 billion on training & learning (Krames, 2003). Welch introduced some new concepts such as 4E's of Leadership (Energy, Energize, Edge & Execute) & six-sigma concept in Quality control, which he also made mandatory for all professionals in GE to learn (Krames, 2003). His legacy still prevails after his retirement (Summer 2000 a publisher paid $7 million to publish his memoirs).

3.4 Michael. S. Dell

From the start, our business- from manufacturing to sales- was oriented around listening to the customer---Michael Dell. Michael Dell was born on 23rd February in Houston Texas, USA (Krames, 2003). He published his first product catalog at the age of 12 (Krames, 2003). He attended the University of Texas at Austin to become a doctor but dropped out at the age of 19 and started Dell Computer Corporation. At the age of 27 he was the youngest CEO of a Fortune 500 company (Krames, 2003). His strategy & vision was based on keeping customer needs & preferences at the central stage (Chandler, 2004). His once said, "Managers can't force their philosophies or views in the market place but learn from market & make products accordingly". He created a culture "Involve customer in every thing & organize people to satisfy them" (Krames, 2003).

3.5 Past studies and derivation of common characteristics in corporate leaders

J.Krames in his book "What the Best CEO's Know", 2003 gives five basic characteristics a leader should possess in order to transform any business, which he found in seven exceptional leaders like Jack Welch, Bill Gates, Michael Dell, Andy Groove & three more. The common characteristics which all these four well-known corporate leaders possess are as follows:

Start with a view of the market place & create an organisation focused on satisfying customer needs

They possess an evangelical leadership gene. In other words they are devoted & committed to a cause/philosophy.

They understand the critical role of culture know how difficult it is to bring a cultural change.

Create next generation products, solution etc.

Implement the best ideas regardless of their origins.

Henry Mintzberg in his article & book "The fall & Rise of Strategic Planning", HBR, January 1994 urges that the middle level managers are crucial in the organisation as they are the only link between the lower and the top management. The middle level managers according to Mintzberg are closer and possess more information about what's happening outside the organisation than the top management personnel's. Mintzberg (1994) then urges that the strategies made by the middle level managers are deliberate (planned) and those made by top management /leaders/ strategic thinkers are emergent. The environment outside the organisation is not stable it always fluctuate that's why Mintzberg says that deliberate strategies are good for inside the organisation but for outside the organisation strategies should be emergent and should be made by strategic thinkers i.e. leaders. The role of middle level managers should be to provide sound information to the strategic thinkers through his analytical & technical skills.

Bottom line: From the literature review above its clear that motivation (self and team), understanding sub ordinates and other peers, ability to control people, self confidence and building a team are the five most important characteristics required by a leader. These are the five pillars sketched by Goleman (2004) for Emotional Intelligence. If we look at the corporate leaders of 21st century we can easily differentiate the leadership styles of majority of them Example Rockfeller Sr, Michael Dell and Sam Walton can be termed as charismatic while Jack Welch lies in the transformational leadership domain. This can be mainly due to the fact that the first three were entrepreneurs while the later was more of in-house leader of General Electric. James Krames on other hand provides a theoretical framework defining the key common characteristics in corporate leaders. Krames (2003) has narrowed down the broader characteristics define by other academics like stakeholder or customer centric focus i.e. concern about society values as uttered by Gandhi. The other elements such as understanding role of culture is similar to building a team as its truly said "organisation doesn't has culture but itself is culture". A visionary attitude found in most leaders such as Michael Dell, Rockfeller Sr, Bill Gates and more is one of the symptoms of charismatic leadership style.

From the above secondary research deck we have analysed the common leadership characteristics present in today's corporate leaders such as Rockfeller, Jack Welch, Sam Walton and Michael Dell. This surely answers one of our research questions related to understanding characteristics those make up a great leader. Now, we would like to understand whether these unique characteristics have provided long-term competitive advantage to organisations such as Dell, Exxon Mobil, Walmart etc. A respondent size of 50 business students in UAE are selected as sample to understanding the current status of organisations those were or are represented by corporate leaders such as Rockfeller, Jack Welch, Sam Walton and Michael Dell on regional basis.

Sr No

Questions

Yes

No

Â

Â

1

Do you feel ExxonMobil, Dell, Walmart and GE are market leaders in respectively segments globally?

Â

Â

Â

Â

Are these organisations mentioned above are still run on leadership visions incepted by great leaders or need some restructuring

100%

0%

Â

Â

4

Do you feel Middle East business subsidiaries of ExonMobil, Dell Corportation share the same leadership vision and culture as headquarters

95%

5%

Organisation as family

In fluxed self confidence across all organisation level

High spirited motivation

Understanding micro and macro factors

5

What is one thing that you feel is good in these corporations or their great leaders style?

35%

15%

15%

35%

Thus from the above short survey it could be seen that great leaders such as Sam Walton, Michael Dell have created visionary organisations i.e. long-term sustainable corporations via inception of their unique leadership characteristics across corporate culture and appoint top management executives those will always adhere to the same. Thus leadership surely creates competitive advantage and great leaders or founders characteristics shape up the corporate culture elements which remain forever. Even after great leaders such as Sam Walton pass off Walmart still dominant the global retail segment. This is predominantly because Sam Walton incepted leadership culture or characteristic of Walmart as complete family business and which is still prominent in the corporation (2010). As part of corporate culture "Oneness" across Walmart recruitment of right candidate that will perceive the company as family is primary to the organisation and shapes up the primary business strategy.

In the similar fashion if we take the example of Dell Corporation, the founder and CEO "Michael Dell" has the ability to control individuals. Dell Corporation has one of the most flat and disciplined organisation culture and is build on virtual factory concept. Majority of candidates recruited as required with disciplined people management skill sets. Finally, leadership characteristic of Michael Dell has shaped up the corporate culture and provided Dell Corporation competitive edge against much older peers such as HP and IBM in past 5-10 years.

Finally, it could be witnessed that unique leadership characteristics helping organisations to achieve regional competitive advantage irrespective of cultural and other individual managerial perceptions and business ethics. Thus Walmart and ExxonMobil Middle East subsidiaries behave in similar fashion as headquarters or any other regional business unit due to strongly bonded leadership vision and characteristics influxed into corporate culture.

5.0 Propositions

Thus it could be seen that unique leadership offers competitive advantage to corporations which could be easily seen from examples of Walmart, Dell Corporation etc from above secondary and primary findings. On the other hand, great leaders possess one or more of the following characteristics which is used to shape up strong corporate culture which will drive a particular organisation towards sustainable competitive advantage (motivation (self and team), understanding sub ordinates and other peers, ability to control people, self confidence and building a team). Majority of great leaders such as Sam Walton, Michael Dell etc recruit personnel's/ top management executive carefully aligned with their leadership vision to reduce pitfall on long-term basis. In order to enhance the validity of research it would be great in near future to extend the topic and understand whether unique managerial characteristics can enhance competitive advantage for organisations or not using Kotter skill sets differences benchmarking matrices.

Great leader's characteristics drive unique leadership further enhancing visionary corporate culture helping enterprises achieve competitive advantage. Thus great leaders unique characteristics are so strong and ground rooted that even after their non active participation it stands test of time and helps enterprise achieve regional and international dominance status quo.

Thus irrespective of location and regional corporate culture, unique leadership characteristics & vision incepted by great leaders such as Sam Walton, Michael Dell etc shape up a regional subsidiary or operations towards sustainable competitive advantage for centuries along with the core business unit i.e. global operations or headquarters.

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